US issues deepwater permit to ATP; third since end of USG ban

Washington (Platts)--18Mar2011/609 pm EDT/2209 GMT

The Bureau of Ocean Energy Management, Regulation and Enforcement Friday said it has issued a deepwater drilling permit to to ATP Oil & Gas Co., the BOEM's third deepwater permit since the Interior Department rescinded its ban, enacted following the April 2010 Macondo blowout.

The permit is to drill the Mirage well in Mississippi Canyon Block 941, about 90 miles south of Venice, Louisiana.

The ATP permit is one of the seven that US District Court Judge Martin Feldman in New Orleans had ordered BOEM to decide on within 30 days. That order was postponed Wednesday by a federal appeals court hearing the government's appeal. On March 1, Feldman added two pending ATP permits to a list of five earlier permits that BOEM was ordered to decide on. Feldman's order came at the request of ATP and Ensco Offshore, which have sued the government, saying that the slow pace of issuing permits amounts to an illegal moratorium.

Drilling on ATP's well began in 2008, in 4,000 feet water depth, before being suspended in July 2009. A rig was preparing to install a production facility in April 2010, when the temporary drilling suspensions imposed following the Deepwater Horizon oil spill halted work.

In a quarterly earnings conference call last week, Paul Bulmahn, the US independent's CEO, said ATP would likely start drilling within seven to 10 days after gaining BOEM approval. He hopes the level of detail in the thick application will convince Interior to award the long-sought drilling permit.

ATP's application had been cased by a rig belonging to Diamond Offshore. The application seeks to change from that rig to one owned by Nabors Industries, Bulmahn said.

Interior temporarily banned deepwater oil and gas drilling after the Macondo disaster. But even though Interior formally lifted its moratorium in October, it has still been slow to issue permits, in part because it now requires companies to show that they have access to the specialized subsea equipment and other resources they would need to contain a worst-case-scenario oil spill. The BOEM is an agency within Interior.

ATP has signed up to use a spill-containment system devised by Houston-based Helix Energy Solutions Group, which is comprised of many of the same vessels that were used to fight BP's blow-out Macondo well in the gulf last year. A second spill-containment system, offered by an entity called the Marine Well Containment Company, is led by ExxonMobil and supported by four other oil majors.

--Keith Chu, keith_chu@platts.com

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